LOS ANGELES Jan 22 A class action lawsuit
filed against cell phone carrier T-Mobile USA Inc can go
forward because the company's arbitration clause is not
enforceable under Washington state law, a federal appeals court
ruled on Tuesday.
The ruling, by the Ninth U.S. Circuit Court of Appeal,
follows others by U.S. courts that found that some arbitration
clauses go too far in protecting companies from consumer claims
of unfair practices, said Seattle attorney Daniel Johnson, who
represents the plaintiffs.
"The majority of the courts around the country have lined
up in the same way as the Ninth Circuit," Johnson said. "There
is a limit to what you can require consumers to give up in
terms of protecting their rights."
A spokeswoman for Deutsche Telekom (DTEGn.DE)-owned
T-Mobile USA had no immediate comment.
Two T-Mobile USA customers, Kathleen Lowden and John
Mahowald, sued the company for breach of contract and violating
the state of Washington's Consumer Protection Act. Lowden and
Mahowald said in the suit that T-Mobile USA charged them
improper fees for services that should have been free and
billed calls during the wrong billing cycle.
T-Mobile USA asked a federal court to compel the plaintiffs
to arbitration, citing a clause in their service agreements
that prohibit class action litigation and limit punitive
The Ninth Circuit upheld the district court in ruling that
those provisions were "substantively unconscionable and
unenforceable" under state law.
The appellate court also rejected T-Mobile's argument that
the Federal Arbitration Act, which validates contractual
arbitration agreements, pre-empts state law.
The Washington Supreme Court recently ruled in a case
involving Cingular, now AT&T (T.N), that its class action
waiver clause was "an unconscionable violation of (the state's)
policy to protect the public and foster fair and honest
competition" because it forestalled attempts to vindicate
(Reporting by Gina Keating; Editing by Tim Dobbyn)